AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights:
Revenue Growth & Sales Performance: Total revenue grew by 1.3% to £124.2m (H1 FY24: £122.6m), with store LFL (like-for-like) sales up 0.9%, driven by strong seasonal offerings and fiction book sales.
Improved Profitability: Pre-IFRS 16 adjusted EBITDA loss narrowed to £2.8m from £8.5m in H1 FY24, with an adjusted loss before tax of £6.5m (FY24: £10.4m loss).
Strategic Focus & Future Growth: TheWorks has announced a new strategy targeting sales of over £375m and an EBITDA margin of at least 6% within the next five years, alongside an expected adjusted EBITDA of £8.5m for FY25.
TheWorks.co.uk plc (LSE:WRKS), a leading family-friendly value retailer, has announced its interim results for the 26 weeks ending 3 November 2024 (H1 FY25). The company also provided an update on current trading and unveiled a new strategy aimed at significant long-term growth. Despite facing challenges in the online segment, TheWorks has made substantial progress in store sales and operational efficiency, positioning itself for continued success.
TheWorks.co.uk, a value-driven retailer known for its arts, crafts, toys, books, and stationery, reported a solid performance for the first half of FY25, marking a year-on-year revenue increase of 1.3%, reaching £124.2 million. While like-for-like (LFL) sales experienced a slight dip of 0.8%, the company’s performance was in line with its expectations and surpassed the broader non-food retail sector.
Store Performance Outshines Online
The majority of the company’s revenue still comes from physical stores, which saw a positive 0.9% growth in LFL sales. This growth was largely attributed to improved seasonal product ranges and an increase in fiction book sales, which remained a staple of TheWorks’ offerings. However, online sales, which had been an area of focus in recent years, saw a decline of 14.7%. This drop was primarily due to a planned reduction in promotional activity and operational challenges at the company’s third-party online fulfilment centre. Despite these online challenges, store performance has been resilient, which reflects the strength of TheWorks’ brick-and-mortar presence.
Cost-Cutting Measures and Margin Improvements
One of the key achievements of the period was the significant improvement in profitability. The pre-IFRS 16 adjusted EBITDA loss shrank to £2.8 million from £8.5 million during the same period last year, and adjusted loss before tax was reduced to £6.5 million (from £10.4 million). This improvement was driven by a combination of actions aimed at growing product margins and implementing cost-saving measures across the business. The company saw a positive 220 basis point increase in product margins, which helped offset some of the pressure on the business from external costs.
Current Trading and Strategic Vision
As of 19 January 2025, TheWorks.co.uk’s current trading performance remains in line with expectations. The company reported a 1% increase in LFL sales for the 11-week period, aided by operational improvements in stores and its retail Distribution Centre. However, online sales continued to decline by 14.9% year-on-year.
Looking ahead, the company is optimistic about the remainder of FY25, expecting product margin growth and ongoing cost-saving actions to continue delivering positive results. TheWorks is on track to meet its market expectations of a pre-IFRS 16 adjusted EBITDA of £8.5 million for FY25, with further profit growth anticipated in FY26.
TheWorks has also outlined an ambitious new strategy that aims to transform the business over the next five years. The company has set a target to achieve sales exceeding £375 million and an EBITDA margin of at least 6%.